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Small firms create 'lion's share' of new jobs

As unemployment continues to fall, the Federation of Small Businesses (FSB) is calling for more to be done to support small businesses, given that SMEs, it says, create the most new jobs.

According to figures from the Office for National Statistics (ONS), unemployment fell by 4,000 in the three months to June 2013. However, long-term unemployment is up and there have been further increases in the number of those unemployed for more than one and two years.

John Allan, FSB national chairman, said: "The uptick in the employment rate is good news, with 301,000 more people in employment in April-June 2013 compared to last year. However, unemployment remains stubbornly high at 7.8%, and the figures for young people and the long-term unemployed remain a concern.

"We know that small firms create the lion's share of new jobs, with FSB research finding that 78% of transitions for non-participants into the private sector come through small firms or by starting their own business. Simplifying assistance to small businesses would make it easier for more firms to take people on and Government could do this by consolidating the myriad number of support schemes currently in place to help small firms."

In response to the figures, the British Chambers of Commerce (BCC) is also calling on the Government to do more to support businesses. David Kern, BCC chief economist, said: "We are pleased to see the private sector is determined and able to create jobs. But it needs more support to sustain this, through increasing the flow of credit to viable businesses, a continued focus on keeping inflation low, and to reverse the large fall in investment in the UK that we have seen in recent years."

Mark Beatson, CIPD chief economist, said: "The challenge for the increasing proportion of employers looking to hire will lie in finding the right talent to fill their vacancies. The survey suggests that turnover still remains low, perhaps because many employees are reluctant to leave the security of their current role for fear that the market dips again, so employers could find fewer ideal candidates around than they might have expected."

However, turnover and pay expectations could rise in the future, he adds. "Clearly employers feel they do not need to raise pay to meet recruitment goals and, with turnover low, retention is unlikely to be a pressing issue for most organisations. However, both these factors could turn as the job market improves."